EFA Financial Handbook 2016

On November 10 by Mark Orchison

The EFA Financial Handbook has been updated and it’s a thrilling read! There are some interesting changes that MATs and Academies need to address. The foci of the changes are predominantly around risk management, audit and compliance. Specifically, this relates to auditing, risk management and oversight at each constituent Academy within a Trust. This isn’t just about financial controls, policies and processes, it’s more about the identification of areas of spend such as buildings, facilities management, ICT, as well as ensuring there are robust, measurable checks and balances that demonstrate compliance.

Technology in schools is usually the third largest area of spend after you have considered staffing and buildings. It’s also one that has been picked up by the government and the press a number of times in order to highlight potential issues and risks. Given the probability that technology will be a considerable amount of spend, the EFA handbook has a consistent message around the need for rigour, control and audit. Within the handbook there are a number of clauses that we know are a frequently a challenge for MATs to achieve when it comes to technology. We’ve outlined these below and given a short explanation or reason why they can pose a problem.

1.5.14 The board of trustees should identify the skills and experience that it needs, and address any gaps through recruitment, and/or induction, training and other development activities.

WHY? Because this means that the trustees are responsible for identifying whether they have the right skills, expertise and experience to confidently ensure financial controls around technology spend within each school and at Trust level. If not, they are responsible for plugging those gaps with additional support.

2.3.2 The academy trust must establish a framework that recognises public expectations about governance, standards and openness.

WHY? Because it is difficult to have the right controls and measures in place to compare performance of IT systems and spend across different schools, with different starting points.

2.3.3 The trust’s internal control framework must include:

Effective planning and oversight of any capital projects

Ensuring efficiency and value for money in the organisation’s activities

A process for independent checking of financial controls, systems, transactions and risks

MEANING: Technology is large area of discretionary spend. Almost every school will be planning some form of IT upgrade during the year. MATs need to have an effective framework to forecast IT spend, manage the procurement and manage the quality of delivery. Furthermore, there is an obligation for external independent checking of those controls.

2.4.5 In multi-academy trusts the audit committee’s oversight must extend to the financial controls and risks at constituent academies.

MEANING: The audit committee need to be provided with management information on the technology spend and its effectiveness for each school. Supporting this needs to be data that can be further audited and presented in a common standard.

4.8.1 Academy trusts must be aware of the risk of fraud, theft and/or irregularity occurring and, as far as possible, address the risk in their internal control and assurance arrangements by putting in place proportionate controls. Trusts must take appropriate action where fraud, theft and/or irregularity is suspected or identified.

MEANING: Technology is a large area of discretionary spend. Many of the cases in schools of irregular accounting or fraud relate to technology as it is very easy to blind side people with terminology, remove assets or misrepresent a purchase. MATs therefore need to have management controls and expertise to minimise the risk of this occurring.

3.3.1 (Novel and/or contentious transactions) Novel payments or other transactions are those of which the academy trust has no experience, or are outside of normal business activity for the trust. Contentious transactions are those which might give rise to criticism of the trust by Parliament, and/or the publc, and/or the media. Novel and/or contentious transactions must always be referred to EFA for explicit prior authorisation.

MEANING: That in technology terms, unless the transaction can be fully understood and either conforms to a standard managed managed service with KPIs or is an operating lease, that the EFA should be informed. There are ICT suppliers offering contracts to schools on ‘evergreen’ contracts where you pay per pupil, per year for all your ICT equipment and licensing. These we have identified as both Novel and Contentious.

Since the start of this year we have seen instances of all these type of issues. A number of these can be viewed in a keynote I recently presented at the Annual MAT Summit.

Practically, what should schools and Trust’s be doing to be ‘technology’ compliant with the handbook?

Either have or develop the internal capability, expertise and experience to ensure compliance, or find external support to help. With both of these solutions 9ine can help. We have an annual support package designed to meet a number of requirements for Academies and Multi-Academy Trusts. The overall objective is to provide Education organisations in the 3-18 age bracket a comprehensive and independent strategic support service for ICT. The service enables governing bodies with external audit of technology risks and issues, whilst providing school leaders with the strategic support needed to effectively manage and invest in technology.

In summary, the objectives of the service are:

To provide MAT / school leaders with a single point of contact and defined support structure in managing strategic, operational and pedagogical technology decisions.

To provide MAT / school leaders with an annual plan of issues and risks that need to be addressed in order to maintain effective management and development of ICT provision

To provide ongoing management of the identified risks and issues, reviewing probability, impact and planned mitigations as required.

To support leaders in meeting the audit and governance requirements as set out in the EFA Financial Handbook 2016 for state funded schools.

To support MAT / school leaders in meeting the safeguarding obligations as set out in Keeping Children Safe in Education 2016.

To provide MAT / school leaders with an ICT development plan that is prioritised by need with recommendations based on evidence and data.

To give MAT / school leaders confidence in making ICT related decisions through on hand independent expertise.

To provide governing bodies and trustees of MATs / schools with an independent assessment of the strategic needs of the school or Trust, supported by an annual audit of ICT spend, performance, impact and identified future need linked to impact.

For further information on how we can help, get in touch. We would love to come say hello and talk some more…. Even if it is about the driest of subjects such as the EFA Financial Handbook!